House or Condo: Which is the Better Investment?

Although houses historically appreciate better than condos, occasionally the reverse happens.  It's really a case of supply and demand, driven by demographics.

Typically, condos appeal most to the youngest and oldest segments of the population.

But keep in mind, one of the downsides of condo ownership is that you have limited control over the expenses you'll pay in common with other owners through homeowner association fees and assessments.  You have no control over insurance costs, and special assessments an association management company may impose to replace a roof or upgrade landscaping, and with a single-family home, you control these things.

As the owner of a single family home, you definitely have more control over your expenses, at the very least, giving you an opportunity to shop around for the best prices on things relative to your investment.

To determine whether a house or condo is best for you, talk to us.  We'll help you decide what's right for your particular situation.

2008 Housing Outlook

Although home prices nationwide are down 4.2 percent from a year ago, some economists are predicting "the worst is yet to come."

Just how bad will it get? According to Fiserv Lending Solutions, the median home price nationwide is expected to tumble 5.7 percent this year, which would make it the worst year for real estate in at least 40 years.

The problem stems from that classic economic conundrum: too much supply and too little demand. As of September, some 4 million existing homes were languishing on the market - almost double the number three years ago - in addition to 523,000 new homes.

If you were hoping to sell a home anytime soon, it's a pretty grim picture.  Prices aren't expected to rebound until 2009 at the earliest, and most experts think it will take several years for home values to get back to pre-bust levels.

If you're looking to buy a home, now could be the best time we've seen in decades, and quite possibly the best time we will see for a very long time to come.

Considering a New Home Loan?

Those considering purchasing a new home need to be prepared for the changes that are happening almost on a daily basis in the mortgage marketplace.  Fannie Mae & Freddie Mac are changing guidelines on a fast and furious pace to keep up with the real estate market declines in most of the country.  The loan you were trying to get approved for last month (or last week) may no longer be available when you go to submit your laon application.

Most stated income loan programs are disapearing at a rapid pace, or have had significant changes made to them.  A stated income loan is one requiring you to state your income but not document it.  These loans have all but become extinct in the home equity divisions of almost all companies.  Home equity loans, and lines of credit are becoming more difficult to obtain in connection with a first mortgage to avoid PMI or mortgage insurance.  Many lenders are not allowing these programs any longer due to the fact that they are not protected in the event of a foreclosure without the presence of mortgage insurance.  So don't be surprised if you apply for one of these loans and there have been significant changes.

Credit Scores from 620-679 will now cost you more in the form of points, and or rate on your mortgage.  Many lenders and Mortgage insurance companies will no longer finance over 80% loan to value in the event your credit score is below 620.

Anyone in the process of buying a home needs to be in touch with their loan officer on a weekly basis.  Make sure the program you need to finance your home has not been eliminated or had major changes made to it that might create a problem for you when you go to finalize your real estate transaction.

If you have any questions or comments, we'd love to hear from you.  Post your comment below.  Your email address will never be published on this site in order to protect your in-box from spam.

No Time Like Now for Buying Myrtle Beach Real Estate

Despite what you've heard and read and despite what others are telling you, now is one of the best times in history to be in the market for a home, especially if you're interested in moving on up, or getting a more expensive home.  The other two purchase scenarios offering the best buys in recent history are for first-time home buyers and investment buyers.

Let's start with first-time home buyers.

First-time home buyers are in the best possible situation because they don't have to worry about selling a house in a down market.  They just need to buy one, which is a very good thing.

With prices down, deals are available that would have seemed impossible just a few year ago.  Really good deals, including substantially reduced prices and a bevy of incentives being offered by sellers and builders alike.

It's pretty obvious to understand how those moving to a more expensive home can take advantage of today's market.  Some simple math can show how, even if you take a loss on selling your home, you can actually make a net gain in equity if you buy a more expensive home.

Suppose you have a $100,000 house in an area that has, on average, lost 15% of value.  Your house is now worth about $85,000.  Now, suppose you are interested in a home that was worth $300,000 and now priced around $255,000 (assuming it's also depreciated the same 15%).  On paper, you may lose $15,000 on your home when you sell, but you make $45,000 on the home you buy, so you actually net $30,000 in equity.  Not a bad deal!

Finally, real estate investors are in a good place today to spend less and get more than anytime in recent history.  If you have the cash reserves or resources to invest, now is the time to consider doing it.  Lower prices mean more property for the buck and those that can buy now and have renters to help them weather the storm until the market improves can do very well.  If you're considering investing, do your homework on the area you're interested in and you'll have a good chance to get a great return on your investment dollars.

Opportunities to do well in today's real estate market abound, especially for many purchase scenarios.  If you are a first-time home buyer, thinking about moving to a more expensive home, or interested in real estate investments, as the idiom goes "there is no time like the present."  Contact us to see how well you might fare in the Myrtle Beach real estate market right now.

More Interest Rate Cuts Coming?

The Federal Reserve is hinting that more interest rate cuts might be needed to offset the deterioration in the credit markets leading to deeper problems for the housing sector and overall economy.

The central bank lowered its key federal funds rate - an overnight bank lending rate that affects how much consumers pay for credit cards, home equity lines, auto loans and other forms of credit - by a quarter of a percentage point on Dec. 11 to 4.25 percent.

That marked the Fed's third consecutive rate cut since September as the central bank attempts to deal with the subprime mortgage meltdown, which has caused cash-strapped consumers to default on their loans and banks to report billions of dollars in losses tied to bets on bad mortgages.

Traders are now betting that a rate cut at the Fed's next meeting, a two-day session that concludes on Jan. 30, is certain.  The question is simply how big of a cut it will be.

What do you think?  Will the Fed cut rates again on January 30th?  If so, how much?  .25?  .50?  Tell us what you think and why?  We'd love to hear from you.  Use the comment link below.  Your email address will not be published here for your protection.